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EXHIBIT 10.12
AMENDED AND RESTATED
FORMULA DEVELOPMENT AGREEMENT
THIS FORMULA
DEVELOPMENT AGREEMENT is executed this 21st day of May, 2004,
and made effective as of December 1, 2002,
by and between HARDEE'S FOOD SYSTEMS,
INC., a North Carolina corporation
("HARDEE'S") and PIERRE FOODS, INC., a North
Carolina corporation ("Vendor").
RECITALS
1. HARDEE'S desires to introduce new
products in its restaurant systems.
2. Vendor is in the business of
developing formulations and producing and
manufacturing products of the type and kind
contemplated by this Agreement.
3. VENDOR has developed a product
which HARDEE'S desires to consider for
use in its restaurant systems.
NOW, THERFORE,
in consideration of the mutual promises herein made, the
parties agree as follows:
1. Vendor has developed
specifications and desired elements or
characteristics for the following products
(individually each a "Product" and
collectively the "Products"):
Angus Beefsteak Patty 4.10oz. Item #9561
Angus Beefsteak Patty 5.65oz. Item #9598
2. Simultaneously with the execution
of this Agreement, the parties
entered into a an Amended and Restated
Agreement for the Products (the "Product
Contract").
3. So long as the Purchase Threshold
(as defined herein) is met, Vendor
grants HARDEE'S, together with its parent,
subsidiary and affiliate
corporations, an exclusive, right to
purchase the Products. It is expressly
understood that Vendor will process and
manufacture the Products utilizing
certain proprietary processes, methods,
ingredients and formulas (collectively,
the "Formula") described on Exhibit A
attached hereto and in accordance with
HARDEE'S Finished Product Specifications
attached to the Product Contract. The
parties agree and acknowledge that Vendor
has ownership of the Formula. Other
than for the rights granted herein to
HARDEE'S by Vendor, HARDEE'S, together
with its parent, subsidiary and affiliate
corporations, will not by virtue of
this relationship acquire or claim any
proprietary interest in: (i) the Formula
of Vendor utilized in the manufacture and
production of the Products, (ii) any
patents, patent applications, proprietary
information, processes or methods
containing confidential information of
Vendor and belonging to Vendor, (iii) any
software, trade secrets or other
proprietary information, methods or processes
licensed by third parties to Vendor, or
(iv)
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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any other products, recipes, formulas,
techniques, procedures, or processes of
the Vendor and belonging to Vendor.
4. HARDEE'S acknowledges that it is
aware that Vendor presently
manufactures various protein and sandwich
products substantially similar to the
Products for third parties and for its own
branded sandwiches. This Agreement
shall not limit the right of Vendor to
continue the manufacture and sale of any
products and/or branded items as they are
presently or hereafter may be
constituted or to develop and process other
branded items or products for itself
or others; PROVIDED, HOWEVER, that
notwithstanding the foregoing, so long as the
Purchase Threshold is met, Vendor may
not:
(i) manufacture
for or sell to any third party, other than Carl
Karcher Enterprises, Inc. ("CKE") pursuant
to the CKE Agreement (as defined
herein), or for its own use any Angus Beef
Burger Product that uses the same
proprietary spices in the Angus meat block
formula used in the manufacture of
the Product, or
(ii)
manufacture for
or directly sell to any Competitor of HARDEE'S
(as defined herein) any Angus Beef Burger
Product confusingly similar to a
Product. "Angus Beef Burger Product" means
a beef patty consisting of more than
51% of black cattle beef with a raw weight
range and with respect to a Product
(so long as the Product is subject to the
Product Contract) within .3oz., plus
or minus, of the raw weight of such
Product.
5. For purposes of this Agreement,
the term "Competitor of HARDEE'S" shall
mean any national or regional chain of
"quick" service restaurants or food shops
with one hundred (100) or more restaurants
or shops operated under the same
tradename in which food is prepared
on-premises and sold at an inside counter,
table service or drive-thru window,
intended for immediate on-premises,
off-premises, or in-vehicle
consumption.
6. For the purposes of this
Agreement, "Purchase Threshold" means the
purchase under the Product Contract by
HARDEE'S and its parent, subsidiary, and
affiliate corporations of *** pounds
aggregate of Products from Vendor during
each rolling twelve (12) month trailing
period, the first test period ending
fourteen (14) months after the month in
which first delivery of Products is made
under the Product Contract. If less than
*** pounds is available in any such
period for sale by Vendor, then such lesser
amount available shall be the
Purchase Threshold.
7. HARDEE'S agrees as a condition of
this Agreement that HARDEE'S will not
contract with more than two (2) other
manufacturers (other than Vendor) at any
one time to manufacture and produce the
Products for HARDEE'S. Vendor agrees
that as a condition of this Agreement that
Vendor so long as the Purchase
Threshold is met will enter into agreements
without royalty or fee with such
other manufacturers (designated by
HARDEE'S) to license the use of Vendor's
proprietary Formula for the Products to
said manufacturers solely for the
purpose of manufacturing and producing the
Products for HARDEE'S. Provided,
notwithstanding the foregoing sentence,
Vendor agrees that HARDEE'S may engage
one or two
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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designated manufacturers which Vendor will
license to use the Formula during the
time period beginning as of the date of
this Agreement until the Purchase
Threshold is first tested. Failure by
Vendor to enter into a license agreement
with a designated manufacturer within a
reasonable time, through no fault of the
designated manufacturer, shall constitute a
material default under this
Agreement. It is expressly understood and
agreed by the parties that other than
licensing the use of the Formula, Vendor
shall have no further role in the
relationship between HARDEE'S and the other
said manufacturer.
8. Vendor represents and warrants
that it owns the formulations and
specifications to manufacture the Products
free and clear and has the right to
enter into this Agreement and grant
HARDEE'S and its parent, subsidiary, and
affiliate corporations the exclusive right
to purchase the Products pursuant to
Section 3 and the right to license its
proprietary formulas and specifications
for the production and manufacture of the
Products under Section 7.
9. It is expressly acknowledged that
the Vendor in consideration of the
premises herein and other consideration
received, the legal sufficiency of which
is acknowledged, does hereby grant HARDEE'S
the right of first refusal
hereinafter described. Upon the occurrence
of any one of the following events,
HARDEE'S upon written notice to Vendor
shall have the right of first refusal to
purchase the Formula, and all rights of
ownership thereto, from the Vendor for a
purchase price and purchase terms provided
in writing by Vendor to HARDEE'S
within fourteen (14) calendar days
following the occurrence of any such event.
HARDEE'S shall have in fourteen (14)
calendar days after receiving the purchase
price and purchase terms notice within
which to accept or decline Vendor's
proposal. If HARDEE'S declines to purchase
the Formula during such time period,
then Vendor shall be free to contract with
and sell to any third party the
Formula unencumbered without restriction,
but not on different terms than those
offered to HARDEE'S without giving HARDEE'S
a fourteen (14) day right of first
refusal concerning the same. From the date
of the occurrence of any one of the
events until the date on which the Formula
is purchased by HARDEE'S or by a
third party under this provision, Vendor
shall permit HARDEE'S, or any
manufacturer designated by HARDEE'S, to
produce the Products for HARDEE'S under
the terms of the standard license agreement
set forth in Section 7 hereunder.
a. The Vendor ceases
to manufacture or is unable to manufacture the
Product for any reason for a period of
thirty (30) consecutive calendar days
excepting a Force Majeure (as defined in
the Product Contract) provided Vendor
shall cooperate in good faith in such event
with HARDEE'S and its then
designated manufacturers and any other
temporary designated manufacturer
appointed by HARDEE'S to ensure appropriate
supply of Products until Vendor can
resume production and supply of the
Products as contemplated under the Product
Contract, at which point the rights and
obligations of the parties under the
Product Contract shall resume. In such a
Force Majeure event, until Vendor is
able to resume its supply obligations under
the Product Contract, the Purchase
Threshold and Volume Requirements (as
defined in the Product Contract) shall be
waived;
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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b. Excepting by reason
of delay or default of persons outside the
control of Vendor, the Vendor fails to
perform or observe any portion of its
obligations under Section 7 herein at any
time;
c. The Vendor ceases
to do business as a manufacturer of beef products
for any reason; and
d. The Vendor (i)
voluntarily commences any proceeding or file any
petition seeking relief under any Federal,
state or foreign bankruptcy,
insolvency, receivership, liquidation or
similar law, (ii) consents to the
institution of, or fails to contravene in a
timely and appropriate manner, any
such proceeding or the involuntary filing
of any such petition, (iii) applies
for or consents to the appointment of a
receiver, trustee, custodian, or similar
official of itself or of a substantial part
of its property, (iv) files an
answer admitting the material allegations
of a petition filed against it in any
voluntary or involuntary bankruptcy
proceeding, (v) makes a general assignment
for the benefit of creditors, (vi) becomes
unable, admits in writing its
inability or fails generally to pay its
debts as they become due or (vii) takes
any corporate or other action for the
purpose of effecting any of the foregoing.
Provided in the event of a Chapter 11
reorganization, if the trustee affirms the
Product Contract and the associated
agreements, and the Vendor affirmatively
shows its ability to produce and supply,
and so long as it does so, the Products
in accordance with the Product Contract,
such event so long as in Chapter 11
status, or a complete discharge therefrom,
shall not be deemed an event under
this subsection (d).
10. The parties
recognize the unique nature of this Agreement due to the
uniqueness of the Product, the health and
liability issues integral to the
Product and the effect of the Product on
the reputation of HARDEE'S and Vendor.
Accordingly, the parties agree that this
Agreement is personal in nature and
that neither party may assign or otherwise
transfer its rights and obligations
under this Agreement to another party
without the express prior written consent
of the non-transferring party which consent
will not be unreasonably withheld.
This Agreement shall be binding on and
inure to the benefit of the parties
hereunder and their respective approved
successors and assigns.
11. This
Agreement shall be governed by the laws of the State of
Missouri.
The parties consent to the exclusive
jurisdiction of the state and federal
courts of the State of Missouri for the
adjudication of matters arising out of
this Agreement; and neither party will
assert FORUM NON CONVENIENS with respect
to such venue. This Agreement, and all
Exhibits, are only valid if and when duly
signed by authorized representatives of
both parties. No third party is
authorized to amend or waive, on behalf of
HARDEE'S, any provision of this
Agreement.
12. There are no
understandings, agreements, or representations,
express or implied, not specified herein.
This Agreement may not be amended
except in a writing signed by the
parties.
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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13. It is
expressly agreed and acknowledged that Vendor has entered into
a
certain Amended and Restated Agreement
dated of even date and effective February
1, 2004, with CKE which Agreement and the
attachments thereto (the "CKE
Agreement") grant CKE the right to purchase
products similar to the Products in
accordance with the terms and conditions
therein. Notwithstanding anything
herein to the contrary, HARDEE'S
acknowledges and agrees that the rights,
privileges, and options of CKE under the
CKE Agreement, and the terms thereof,
shall not be deemed a violation of the
Product Contract, this Agreement, or the
Attachments (as defined in the Product
Contract).
Executed the day
and year first above written and effective as of
December 1, 2002.
HARDEE'S FOOD SYSTEMS, INC.
PIERRE FOODS, INC.
By: /s/ John Dunion
By: /s/ Robert C. Naylor
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John Dunion
Robert C. Naylor
Executive Vice
President
Senior Vice President-Sales
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Confidential infor
